What to watch for in GE earnings

SAN FRANCISCO (MarketWatch) – Market heavyweight General Electric Co. releases its second-quarter results before the opening bell on Friday, July 18. This is what investors can expect:

Earnings: General Electric, one of the 30 companies that make up the Dow Jones Industrial Average, is expected to report earnings of 39 cents a share, up from 36 cents a share a year earlier, according to analyst surveyed by FactSet.

Revenue: Analysts are looking for second-quarter sales of $36,334 billion, which would be a 5% improvement over the $34.4 billion a year ago.

AFP/Getty Images

Chairman of the board and C.O of the US conglomerate General Electric Jeffrey R. Immelt is pictured in front of the GE's logo on June 24, 2014 in Belfort, France.

Stock reaction: GE
GE, -0.88%
shares closed 1.5% lower Thursday at $26.61. The share price has fallen 5% so far this year, making it No. 29 among the Dow 30. Only Boeing
BA, +1.57%
shares have performed worse in 2014, down 7.8%.

Despite lagging peers in the Dow, Wall Street has by no means soured on GE. Fully 53% of analysts following the stock have a buy recommendation on it, up from 50% a month ago, and an average share price target of $29.11. This means most of them believe the stock still has room to run.

Key issues: While GE remains in many respects a classic conglomerate, it continues to shift away from consumer finance toward more traditional industrial endeavors. The result of that effort boosted revenue 8% in the first quarter while delivering a 12% higher profit.

GE’s decision last month to spend $17 billion to buy Alstrom’s European energy assets aims to extend these gains. The company claims the Alstrom deal – it’s biggest acquisition ever -- will save it about $1 billion a year after it closes next year.

Amid all this, GE has stepped up efforts to sell its appliance business. While still profitable, low margins and high labor costs leave it out of step with CEO Jeff Immelt’s overall drive toward higher-margin operations.

As always, investors will keep a sharp lookout for any change to GE’s dividend which, at 3.3%, remains among the best on the Dow.

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